All Forum Posts by: Alex T.

Troy - thanks for the detailed response. Everything you've said makes sense. We're proceeding with lowering the slab. They did the test holes today and found that the foundation terminates 12" below the current top of the slab, so we will increase ceiling height by 8". We're at 6'4", so once finished, we'll be maybe an inch or so below 7'. Not bad - I'm happy with the outcome.

Ultimately, this time it worked out for me, but that's good advice to get underpinning specs on the plans from the get-go. I doubt my architect/engineer would've charged much (if anything) more to add the specs, so I should do that in the future just in case the slab is basically as low as it can go.

Not sure if anyone knows this, but why didn't they just put the slab at the bottom of the footers when they designed the foundation to begin with? I get that basements weren't meant for living/storage spaces back in the day, but still, it seems weird that the 4" floor sits a foot above the real bottom of the foundation...but the more I read about this, it sounds fairly common.

I agree 100%. There's a big difference between 6.5' and 7', so even an extra half foot changes it from psuedo-living space/glorified storage to a real part of the house. As long as it's over a 6" gain, I think I'll go for it. 6k for the dig plus another 7-9k for all the systems and finishing work. Thanks for your feedback.

Thanks for the local insight, Mike. With finishing, it's going to be around 13-15k. I'm going to finish it regardless, it's just a question of whether it's worth 6k to lower it. If I can get at least 6", it's probably worth it. I believe my contractor is going to do the work as if it's included with our building/alteration permit. We have plans and the building permit has been issued, but it's not as if the basement lowering is called out in the plans. Does that concern you at all? Do you think I need to go back to my architect/engineer and have the plans amended to show the floor lowering? It sounds like that slab isn't structural at all, so assuming the work is done properly, my guess is that it's fine to handle it on our main building/alteration permit. I've worked with this contractor in the past. He has decades of experience in Philly, so I trust him, but now that I have a bit more experience with this, I feel like I need to ask the questions. Thanks again.

I'm looking to dig out a relatively small basement (15'x20') to increase ceiling height. The current height from slab to ceiling joists is 6'4". Anything over 7' is the goal. It looks like a stone foundation with parging (pretty common in early 20th century Philadelphia rowhomes). My GC recommends that we first dig holes in the slab along each foundation wall and check the thickness. He believes there's a good chance we can remove the slab, pour a new 4" slab, and pick up 6-10" of ceiling height, all without underpinning. The cost is $6,000, but he says we'll know how deep we can go before committing the money. I'm not experienced in evaluating this, so I am throwing it out there for anyone to provide insight on. Basically, does this make sense? In all my research, it seems like people just recommend benching/underpinning. No one talks about shaving off thickness of the foundation slab. I'm guessing this is because I'm only looking to go 6-10" deeper and most people are inquiring about 2-3'. And my second concern is I don't see anyone saying that slabs are often 12" thick. It seems like slabs are more commonly 4-6" thick and sitting on the footers, so is it wishful thinking that my contractor is going to find a 12" thick slab, or am I misunderstanding what he's saying. Maybe he's saying dig out the slab entirely and then repour the new one inside the footers (so the top of the slab is flush with the top of the footer)...?

All insight appreciated. Thanks.

@Carl Fischer , much appreciated. What do you think is a fair price to do a relatively simple year of LLC taxes, generate some K1s and 1099s - $650-$750? Thanks.

I'm looking for a qualified, respectable accountant in Philadelphia that can help file taxes for my LLC. Ideally, someone who specializes in real estate. Does anyone have recommendations?

Thanks

@Jon Holdman @Ashish Acharya Thanks for the responses, guys. Look, I get that the best thing to do is hire a quality CPA. I'm with you 100%, and I plan to do just that when my complexity rises. I hope to complete 2-3 flips in 2018, in addition to rental income, so let's assume I will have a competent CPA handling my 2018 return. I'm just trying to focus on 2017. It sounds like there's some disagreement about what can be deducted in 2017. We're not talking about much here. It's between $1,000-$2,000 for LLC expenses that I've deemed as not attributable to the flip. Certainly, you can make a case that everything spent is an asset of the property and goes into the basis because the LLC isn't involved in anything else except this one renovation. Perhaps it's easier - and more correct - to count all expenses towards the basis of the property and thus include them as part of my 2018 return. I have a good grasp of my deductible expenses, and I have clear documentation of every expense, but I don't want to run into a situation where my 2018 CPA says I can't deduct certain 2017 LLC expenses in my 2018 return. So maybe that's a better question. Do you guys believe there are any deductible expenses that I have to report in 2017, or I won't be able to in the year of sale?

Hi Everyone - I'm looking for some advice on how to report my 2017 taxes as it relates to rehabbing expenses.

I just finished renovating a single-family house that I purchased at the end of July 2017. I own the property in an LLC. Since I started this real estate adventure (in early 2017), I have closely tracked every expense. I have categorized each expense, so it's either a business expense (e.g. credit card annual membership fee, LLC fees, tool for construction that I can use again on future projects, etc.) or a project expense (e.g. labor and building materials for the house I'm renovating, driving directly related to the property, etc.).

I'm putting the house on the market in the next few weeks. I know it's a bit late to be asking for tax advice, but how do I report my losses in 2017? I am assuming I should report all business losses (again, the expenses to run the LLC - those not directly attributable to the renovation property) on my 2017 return, and then I will report my total income (sale price - purchase price + project costs) from the sale in 2018 (assuming it sells in 2018...it better!). Does this sound right?

Full disclaimer, I know this is a forum, and I'm asking only for friendly advice. I realize not everyone is a CPA and not all advice is legally sound. I think what I have here is a fairly common situation, and I just want to hear what people think to make sure I am on the right track. As much as I'd love to sit down with a good CPA and spend $500-1000 doing my taxes, my wife and I try to use Turbo Tax. Obviously, if I ever do a lot of flips, I'd invest in a good CPA...but for my first flip, it's not practical unless I were to run into a complex situation. Ok, I'm rambling. Thanks in advance for the help!

I completed a 1031 exchange about 18 months ago. See below for details and my question...

Property #1 (numbers rounded to make it easier - not including fees)

-Bought for 75k

-Down Payment 15k

-Sold for 200k

-Mortgage amount at time of sale 50k

Property #2

-Bought for 250k

-No mortgage, but I did a promissory note through a family member for 100k

Initially, I was attempting to mortgage ~100k on the second property. The issue was that the condo is in a building with over 50% non-owner occupiers. I couldn't do conventional lending because of this, and the rates were crappy on the unconventional products. That's when I got the 100k through a family member at a reasonable rate and established the promissory note. Now, it seems like it'll be easier to take a loan out on the property, and I'm interested in taking around 100k out to either pay back my family member or perhaps finance another deal and keep our note intact.

Can I do this without having any tax liability on my 1031 exchange? My understanding is that I have to reinvest my down payment and all profits from Property #1 into Property #2 (which is 15k+125k=140k). Then I need to replace at least 60k in debt from the mortgage payoff from Property #1 (mortgage amount at the time of sale). My understanding is I could take up to 110k "out" of this property right now without any tax liability. Does anyone see a problem with this? Thank you!

I am working on a full renovation. I have a GC, and he's gotten the following permits: Interior Demolition, Alteration/Building, HVAC, Plumbing, and Electric. Initially, I didn't have a lot of exterior work scoped out, so my GC wasn't doing a whole lot outside the house. Since Winter, I've run into some leak issues, and I need to hire contractors to replace a roof, add downspouts, and repair a rear fence. My GC is willing to do it, but I'd rather save some money and source the work myself. Plus, it'll allow him to focus 100% on the interior. I have spoken to lots of fully licensed/insured sub-contractors in my area who specialize in roofs, fences, etc. I've gotten into the contract phase with some of them, and I have found that no one is planning to pull permits. They have all indicated that they definitely can pull permits if I want, but usually for "self-contained, small projects" such as adding a new layer of rolled roofing, they typically do not bother. I asked my GC if this would be a problem for him during future inspections, and he told me it won't be because we already have a building/alteration permit, and it typically covers a lot more than is actually written into the 2-3 sentences that are in the permit. I've also looked up permit records for lots of renovations in my area. I have never come across a specific permit for something like a new fence, new layer of rolled roofing, etc. Everyone who completed a major renovation seems to only have the building/alteration permit along with MEP, demo, etc. Admittedly, the city does have specific permit forms for everything that I'm trying to do, I've just never seen them used when someone also has a Building/Alteration permit.

What do you think? Will a building/alteration permit cover some of these exterior projects, or is my contractor wrong, and I would be taking on lots of risk by not applying for the specific permits? Thanks for the input.